Is China’s belt and road infrastructure development plan about to run out of money?
State bankers warn that debt levels in host nations are far above recognised safety levels, and say more needs to be done to attract private investors
China’s ambitious plan to recreate the old Silk Road trading routes across Eurasia and Africa is facing a serious financing challenge, according to the country’s senior bankers and government researchers.
Speaking on Thursday at a forum in Guangzhou, capital of southern China’s Guangdong province, Li Ruogu, the former president of Export-Import Bank of China, said that most of the countries along the route of the “Belt and Road Initiative”, as the plan is known, did not have the money to pay for the projects with which they were involved.
Many were already heavily in debt and needed “sustainable finance” and private investment, he said, adding that the countries’ average liability and debt ratios had reached 35 and 126 per cent, respectively, far above the globally recognised warning lines of 20 and 100 per cent.
“It would be a tremendous task to raise funds for the countries’ development,” Li said.
China’s new central bank chief Yi Gang said on Thursday that Beijing was keen to work with international organisations, commercial lenders, and financial centres like Hong Kong and London to diversify funding sources for the plan.